• Amendments to Schedule 1 to the Marine Liability Act
  • January 8, 2016 | Authors: Dionysios Rossi; Graham Walker
  • Law Firm: Borden Ladner Gervais LLP - Vancouver Office
  • The Regulations Amending Schedule 1 to the Marine Liability Act, SOR/2015-98 came into force on June 8, 2015. The amendments increase the general limits of liability for shipowners' claims under Schedule 1 of the Marine Liability Act, SC 2001, c 6 (the "MLA") by approximately 50%. The limits are determined by size of vessel and vary depending on the specific range of size or tranches. Limits of liability for small vessels under the 300 ton gross tonnage threshold remain unchanged.

    These amendments reflect Canada's obligations to the IMO's Convention of Limitation of Liability for Maritime Claims, 1976 (the "LLMC Convention"), as amended by the Protocol of 1996 (the "LLMC Protocol"), which provides the right for shipowners and their insurers to limit their liability on a range of different maritime claims. At its 99th session in April 2012, the IMO Legal Committee decided on the 50% increase based on the experience reported by the International Group of Protection and Indemnity Clubs, which underwrite the liability insurance for 90% of the world's vessels. The increase is intended to account for significant inflation since 1996 that has eroded the value of the maximum level of liability by over 50% in real dollar terms. This may have significant impact on a claimant's recovery of losses incurred.

    Article 6 of the LLMC Convention, which is incorporated as Schedule 1 to the MLA, limits shipowners' liability for: (1) claims for loss of life and personal injury, and (2) claims for damage to property, such as other terminals, cargo and ships. Damages that are subject to other international instruments, such as pollution related to oil spills from oil tankers, are excluded. This limitation applies if the fault for the loss was due to the action or omission of the master or crew with no involvement of the shipowner or his executives or managerial staff.

    The increase in LLMC limits will impact other elements of the MLA's framework, particularly:
    • The Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974, as amended by the Protocol of 1990 which sets the rules governing liability to passengers;
    • The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, which sets out the rules governing liability for pollution damage from bunker oil spills from non-tankers; and
    • The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, 1924, as amended by the Protocols of 1968 and 1979, which sets out the rules governing the shipowner's liability for loss or damage to cargo.
    In its Regulatory Impact Analysis (Canada Gazette, Vol 149, No 10), the Government of Canada indicated that, while difficult to estimate, it is likely that the amend- ments may result in a net benefit to Canada given that the claimants will be mainly Canadians, whereas the respondents will include both domestic and international shipowners. Foreign registered ships, predominantly owned by non-Canadians, are generally much larger than Canadian ships and are more likely to be involved in major marine casualties where the current LLMC limits are exceeded. The Government of Canada also indicated the increase in LLMC limits could also have a positive impact on Canada's Ship-source Oil Pollution Fund (“SOPF”). For instance, in situations where a known ship (other than a tanker) is involved in a spill, the higher limits could allow the SOPF to recover a larger proportion of remedial costs in the rare cases when such incidents exceed the current LLMC limits.

    As a result of Canada being a signatory to the LLMC Protocol, these limits may be increased again in the future. To implement such a proposal, the validity of a proposal to increase liability limits must be examined by the IMO's Legal Committee and two-thirds of the state parties must be in support.